After years of acrimonious economic relations with China, the U.S. insists it wants to turn the page and develop closer ties with the world’s third largest economy.
U.S. Treasury Secretary Timothy Geithner, who arrived Sunday in Beijing for two days of talks with Chinese leaders, said he wanted to foster the same kind of working relationship with China that the United States has enjoyed for decades with European economic powers.
On his first visit to China as treasury secretary, Geithner said the Obama administration was committed to forging a new relationship with China after trade disputes with the U.S. over the past decade.
Those fights have reflected record U.S. trade deficits with China. U.S. critics of China’s economic policies say they have contributed to the loss of millions of American manufacturing jobs.
But China is America’s biggest creditor, holding $768 billion in Treasury securities. The U.S. also hopes China will play a positive role in resolving a tense dispute with North Korea over its nuclear weapons program.
Ahead of his meetings, Geithner played down long-standing areas of disagreement such as China’s currency, which U.S. manufacturers say is undervalued.
“We would like to build with China the kind of relationship we built with the G-7 over the last several decades,” Geithner told reporters traveling with him to Beijing. The Group of Seven includes the traditional economic powers — the U.S., Japan, Germany, Britain, France, Italy and Canada.
Geithner said the U.S. economy, mired in its longest recession since World War II, was beginning to stabilize. “We are seeing more durable stability in the economy and the financial system is in substantially better shape,” Geithner said.
But he said much more needed to be done in the U.S. and in other major economies to make a sustainable recovery possible.
Geithner could not escape the fallout from the recession even as he crossed the globe. He took a military aircraft with the latest in communications equipment that allowed him to be in frequent contact with Steven Rattner, head of the administration’s auto task force, and Obama economic aide Lawrence Summers, who phoned with updates on the pivotal weekend negotiations with General Motors Corp.
Geithner spent the trip in a private cabin at the back of the plane that was equipped with a desk and a bed. Most of the time he was either working the phones, huddled with aides or revising the speech he was to give Monday.
China, with 1.3 billion people, ranks as the third largest economy after the U.S. and Japan. Geithner said China’s new status should be recognized with a bigger voice in such institutions as the International Monetary Fund.
President Barack Obama and other leaders of the Group of 20 major industrial countries and emerging economic powers, which includes China, Brazil and India, pledged in April to work cooperatively on overhauling the IMF and other global institutions. The goal is to give them greater resources to deal with the crisis and provide China and other emerging countries with more say in how the institutions are run.
“We are committed to reforming the international system and our interests are best served by giving China a stake in that process,” Geithner told reporters.
Geithner planned a speech Monday at Peking University assessing the global economy and U.S.-China relations. He spent two summers at the university as a college student learning Mandarin Chinese.
At a briefing previewing the trip for Asian journalists, Geithner referenced those ties, saying he had taught Chinese while in college and had a “long personal interest” in the country. But he insisted while he had worked hard at his Chinese language studies, he was not proficient.
“I cannot actually speak Chinese with competence,” he said. “I did study though for a long time, very hard. I practiced my characters very carefully.”
In addition to meeting with some of his former professors on Monday, Geithner was scheduled to visit an economist training program set up by his father when the elder Geithner was in charge of Ford Foundation programs in Asia.
The Obama administration and China have come out with two massive economic stimulus plans while European countries have resisted Obama’s calls to do more. They say they do not want to face the same deficit problems that the U.S. has.
China has turned its huge trade surpluses with the U.S. into the largest holdings of Treasury debt, but has raised concerns about America’s commitment to deficit reform. Financial markets in recent weeks have sent long-term interest rates higher, a move that some attribute to worries about the U.S. budget deficits.
The administration projects that the deficit for this year will hit $1.84 trillion, a record and four-times higher than the previous mark set last year.
Geithner said the administration had a credible program to reduce the deficits once the economy begins to recover. “No one is going to be more concerned about future deficits than we are,” he told reporters.